Pakistan: Central Bank Reduces Policy Rate

The State Bank of Pakistan (SBP) announced its monetary policy statement today (September 12, 2024) decreasing the policy rate by 200bps to 17.5%. After the announcement, the SBP Governor made the following remarks in the analyst briefing:

The SBP's policy rate decision is influenced by a greater than expected decline in inflation and favorable trends in global oil and food prices. However, given the uncertain nature of these developments, the committee has adopted a cautious stance.

Real interest rates remain sufficiently positive to achieve the SBP's medium-term inflation target of up to 7%.

The SBP is not focused on a specific interest rate level but considers various factors, including the external account and future inflation, when making rate decisions.

Governor was hopeful that the IMF board will review Pakistan’s agenda for the approval of the 37-month Extended Fund Facility (EFF) program this month, as the government has secured all required external financing assurances.

Moving forward, the SBP will publish semi-annual data on central bank interventions in currency markets, as well as projections for foreign exchange reserves and upcoming debt obligations over the next six months.

Data on currency market interventions will be published with a three-month lag due to the sensitivity of the information.

In June 2024, the SBP purchased US$573 million from the open market.

By the end of March 2025, country’s foreign exchange reserves are projected to reach US$12.0 billion despite debt repayments.

The government is obligated to pay US$14.2 billion by March 2025, of which US$8.3 billion will be rolled over, while the remaining amount consists of debt repayments.

To date, the government has cleared US$4 billion in debt, including US$2.3 billion in rollovers. The remaining debt repayments of US$5.8 billion will be spread evenly until March 2025.

For FY24, the government has US$26 billion in debt obligations, including US$12 billion in rollovers and US$4 billion in commercial bilateral loans, which are also expected to be rolled over.

Of the US$8.3 billion repayments due this year, US$1.7 billion has already been settled.

According to audited accounts, the SBP earned a profit of PKR2.5 trillion in FY24 and is expected to disburse this amount as a dividend to the government in the coming days.

Non-oil imports are at levels seen in FY22 and early FY23, with the reduction primarily driven by a significant decline in oil imports.

 

 

Rising resentment against Israel

A Jordanian driver, identified as Maher Thiyab Hussein al-Jazi, killed three Israelis on Sunday at the Israeli-controlled border crossing that connects Jordan with the West Bank.

The Israeli military said the man approached the Allenby Bridge from Jordan in a truck, exited the vehicle and opened fire on forces operating the bridge.

The Jordanian citizen’s shooting at the border crossing shows the depth of anger against Israel. The majority of people in the Arab world are filled with a strong feeling of rage against the Israeli rulers.

Persons like Maher Thiyab Hussein al-Jazi sacrifice their lives in defense of Palestinians that there is no prospect for their agonies.

On Jun 03, 2023, four months before the October 07 attack by Hamas on Israel, an Egyptian border guard also crossed into Israel and killed three soldiers. The Egyptian officer knew that he would be killed but he defied all the dangers to vent his anger at Israel.

The anti-Israeli feeling has run deeper since Israel started the sadistic war on Gaza.

Jordanians have held regular protests against the Gaza war despite harsh restrictions on speech and public gatherings.

The driver’s brother Shady Al-Jazi said his brother’s anger at Israel’s war on Hamas in Gaza may have been a motivating factor.

“He used to work as a truck driver and would cross (the bridge) often to offload the truck and then return back to Jordan. But his grief over what’s happening to the Muslim nation, seeing all the killing in Gaza, and every one of us who feels passionately for his brethren, this could motivate him,” he told Jordanian news outlet Ammon in an on-air interview, the Washington Post reported.

In reaction to the incident, Israel’s Prime Minister Benjamin Netanyahu said his country is “surrounded by a murderous ideology led by Iran's axis of evil.”

But it is ideologically driven extremists, including Netanyahu, who have put Israel in such a precarious situation. They cannot get out of this self-created quagmire otherwise there is a U-turn in Israel’s policy toward the Palestinians.

Netanyahu is notoriously famous for telling lies and making nonsensical remarks. Even when people gathered outside Capitol Hill to protest the Israeli war on Gaza while he was addressing the American Congress on July 24, he called protestors "useful idiots" of Iran and claimed that Iran is funding and promoting anti-war protests. 

Netanyahu has lost direction and badly gone mad. He is not even listening to the Israelis who want an end to the war in Gaza. About 750,000 people took to the streets on Saturday night in Tel Aviv and Jerusalem demanding a ceasefire in Gaza.

In the campaign against his rivals for recapturing power he called himself the “man of security”. But he has put the entire Israel in jeopardy.    

Netanyahu’s attempts to demonize Iran for Israel’s troubles neither work nor deceive people. Every person with a common sense can easily understand the hatred toward Israeli rulers.

Netanyahu’s army has been committing war crimes and crimes against humanity in the Gaza Strip since October last year. The settlers have killed about 700 Palestinians in the West Bank during these 340 days.

The anti-Israeli feeling is also boiling high in many non-Arab countries including the United States. The protests in American universities against the war on Gaza and calling President Biden “genocide Joe” for shipping lethal arms to Israel are examples of impatience and resentment against the savage war on Gaza.

 

How far can crude oil prices plunge?

We are of the view that crude oil price may fall below US$60 per barrel, if production in countries like Libya, Iraq, Iran and Venezuela rise to normal. Sanctions on Russia and Iran are also there to avoid glut. We have the convictions that unrest in some of the African countries is there to avoid fall of crude oil price below US$50 per barrel  

Brent crude futures fell below US$70 a barrel on Tuesday for the first time since December 2021, after OPEC Plus revised down its demand forecast for this year and 2025.

Brent crude futures were traded at US$69.51 a barrel and US West Texas Intermediate (WTI) crude slipped to US$66.21. On Monday, both benchmarks had risen about 1%.

On Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) in a monthly report said world oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from last month's forecast for growth of 2.11 million bpd. Until last month, OPEC had kept the forecast unchanged since it was first made in July 2023.

OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd. Prices slid on the weakening global demand prospects and expectations of oil oversupply.

On Monday, Chinese data showed consumer inflation accelerated in August to its fastest in half a year, though domestic demand remained fragile, and producer price deflation worsened.

Data released on Tuesday showed China's exports grew in August at their fastest in nearly 1-1/2 years, yet imports disappointed with domestic demand depressed.

“If we lose China this market is going to have a problem because OPEC just cannot cut enough to offset the US and Brazilian position, and some of the other reservoirs at work,” said John Kilduff, partner at Again Capital.

 

MSC ship loses 46 containers overboard

According to Seatrade Maritime News, the South African Maritime Safety Authority (SAMSA) has reported that the Liberian-flagged MSC Antonia has lost lost 46 containers overboard while a further 305 boxes suffered damage in the Indian Ocean corridor on August 28, 2024.

"The incident occurred approximately 29 nautical miles northeast of Port St. Johns while the vessel was enroute from Colombo to New York. In light of the container loss, a navigation warning has been issued to all vessels operating in the affected area,” SAMSA said in a statement.

The MSC Antonio safely arrived in the port of Cape Town on August 30, where it would undergo a comprehensive assessment and necessary repairs.

The incident with the MSC Antonio follows the loss of 99 containers from the CMA CGM Belem in adverse weather while sailing off the coast of Richards Bay in South Africa on Thursday August 16.

The 13,000 teu CMA CGM Belem sought safe habour in the Port of Ngqurha following the incident and has since been making load adjustments.

On Friday last week, the ship's insurer representatives in South Africa launched a five hour aerial surveillance and search for the vessel's lost containers after several sightings of floating containers along the Wild Coast area of the Eastern Cape province were reported to the authorities.

SAMSA said around 20 containers were spotted but it could not be confirmed that they belonged to the CMA CGM Belem.

The incident with the CMA CGM Belem came just a month after the CMA CGM Benjamin Franklin lost 44 containers overboard off the coast of South Africa while sailing round the Cape of Good Hope.

All three vessels in recent incidents were on voyages between Asia and Europe and transiting the Cape of Good Hope due to the security situation in the Red Sea.

Container ships would normally transit the Red Sea and Suez Canal between Asia and Europe. However, the vast majority have diverted to sailing via the Cape of Good Hope to avoid attacks on shipping in the Red Sea by the Houthis. This has exposed vessels that would not normally transit the African cape to severe winter storms in the region.

 

 

 

 

Iran trade with OIC members on the rise

The value of the trade between Iran and the other 56 members of the Organization of Islamic Conference (OIC) reached US$26.7 billion in the first five months of the current Iranian calendar year, registering a 15 percent increase compared to the same period a year earlier.

According to the head of the Islamic Republic of Iran Customs Administration (IRICA), the volume of the trade between Iran and OIC member states in the mentioned five months reached 42.3 million tons, also 10 percent more compared to the previous year's same time span.

Iran exported 33.6 million tons of non-oil goods worth US$13.5 billion to OIC member countries and imported 8.7 million tons of commodities valued at US$13.2 billion from them in the first five months of the current Iranian year, Mohammad Rezvanifar said.

The deputy economy minister added that the country’s exports to OIC members registered 16% and 8.0% increase in value and weight respectively in the mentioned period, while the import of products from the mentioned countries also increased by 18% and 15% in terms of weight and value.

Among the OIC member states, the United Arab Emirates (UAE), Turkey, Iraq, Pakistan, and Oman were Iran’s major trade partners, the IRICA head noted.

Back in May 2023, the former head of the Iran Chamber of Commerce, Industries, Mines, and Agriculture (ICCIMA) stressed the need for establishing a joint Islamic market among OIC members over the next 10 years.

Addressing a gathering of the heads of OIC member chambers of commerce on the sidelines of the "Russia - Islamic World: Kazan Forum 2023" in Russia, Gholam-Hossein Shafeie said, “An important issue that has been discussed a lot in the past and the organization should pay attention to it in the current situation is the creation of a common Islamic market in the next 10 years, which can be achieved by concluding a free trade agreement among Islamic countries and removing tariff and non-tariff barriers.”

“Experts have worked on the Islamic market plan, and using the experiences and studies of these experts can definitely be a way forward,” he added.

The Organization of Islamic Cooperation, which was formed in 1972, today has reached a position where, according to statistics, the future of the world's energy would be in the hands of the Organization of Islamic Cooperation, Shafeie said in his speech.

 

India to extend sugar export ban

According to a Reuter report, India plans to extend a ban on sugar exports for the second straight year as the world's biggest consumer of the sweetener grapples with the prospects of lower cane output.

New Delhi also plans to raise the price at which oil companies buy ethanol from sugar mills as part of efforts to boost supplies of the biofuel. They did not wish to be identified as deliberations were not public.

India's absence from the world market would further squeeze global supplies, propping up benchmark prices in New York and London.

New Delhi plans to prohibit mills from exporting sugar when supplies from Brazil, the world's top producer and supplier of the sweetener, are expected to drop because of a drought in the South American nation.

"In the current crop scenario, there is no space for sugar exports," said one of the government sources.

"After fulfilling the local sugar demand, our next priority is ethanol blending, and we need much more cane to meet the ethanol blending targets."

Seeking to curb carbon emissions, India aims to increase the share of ethanol in gasoline to 20% by 2025-26, from around 14% now.

Some of the Indian sugar mills have increased their ethanol production capacity in the last few years.

The government is also considering an increase in ethanol procurement price by more than 5% for the new marketing season beginning November, sources said.

Late last month, a government order said India would allow sugar mills to use cane juice or syrup to produce ethanol starting in November.

India, also the world's biggest sugar producer after Brazil, banned mills from exporting the sweetener during the current season that began on October 01, 2023. That was the first sugar export curb time in seven years.

New Delhi allowed mills to export only 6.1 million metric tons of sugar during the last season, nearly half of the country's total shipment in 2021-22.

Sugar output during the next 2024-25 season is likely to fall to 32 million metric tons from this year's 34 million tons due to the adverse impact of last year's patchy rains in Maharashtra and Karnataka states, the sources said.

"The world will need shipments from India in 2025, as Brazil's production is expected to be lower. Without Indian exports, global prices will rise further," said a Mumbai-based dealer with a global trade house.

 

Elections in Indian Occupied Kashmir

This article explores the complexities and consequences of holding elections in a region where the very foundation of democratic principles is under siege.

As India prepares to hold assembly elections in the disputed territory of Jammu and Kashmir (J&K), a cloud of skepticism and dissent hovers over the region. For many Kashmiris and their leaders, these elections represent not a democratic exercise but a cynical attempt to legitimize India’s occupation and control over the region.

The announcement of the elections has been met with sharp criticism from prominent Kashmiri leaders such as Altaf Hussain Wani and Abdul Hameed Lone, who have denounced the move as a desperate ploy to deceive both the international community and the local population.

Since the abrogation of Articles 370 and 35A in August 2019, Jammu and Kashmir has undergone a dramatic and controversial transformation. Once a state with special autonomous status, it was downgraded to a union territory under direct control of the central government in New Delhi.

This move was widely condemned by Kashmiris and has been perceived as an assault on the region’s unique cultural, political, and religious identity. The central government’s subsequent actions, including changes to domicile laws and the intensification of military presence, have only deepened the sense of alienation and resentment among the local population.

In this context, the upcoming elections are viewed by many as an attempt to present a veneer of normalcy in a region that remains deeply troubled.

The Indian government’s narrative is one of democratic engagement and development, but this is a narrative that rings hollow for those who live under the constant shadow of militarization and political repression.

The skepticism surrounding the elections is not without reason. Historically, elections in Jammu and Kashmir have been marred by low voter turnout, allegations of rigging, and widespread disenchantment with the political process.

For many Kashmiris, the electoral process is seen as a tool used by the Indian state to project an image of legitimacy while the underlying issues of self-determination and human rights remain unaddressed.

Leaders like Altaf Hussain Wani have been vocal in their criticism, labeling the upcoming elections as a “drama” designed to create a false impression of normalcy.

Wani’s assertion that these elections are nothing but a sham reflects the broader sentiment among Kashmiris who feel that their voices are being silenced and their aspirations ignored.

The elections, in their view, do not represent a genuine opportunity for democratic expression but rather a strategic maneuver by the Indian government to consolidate its control over the region.

The Indian government’s portrayal of the elections as a step towards restoring normalcy and democracy in Jammu and Kashmir is met with widespread skepticism.

While the central government insists that the elections are a democratic exercise, the reality on the ground tells a different story.

The ongoing militarization, the curtailment of civil liberties, and the lack of meaningful political engagement with local leaders have created an environment where true democratic expression is impossible.

For many Kashmiris, the elections are a façade—an attempt by the Indian state to project an image of stability and legitimacy to the outside world while continuing to suppress the region’s demand for self-determination.

The electoral process, rather than addressing the root causes of the conflict, serves to entrench the status quo and perpetuate the cycle of violence and repression.

The upcoming elections in Jammu and Kashmir may proceed as planned, but their legitimacy and effectiveness are in serious doubt. For the elections to be meaningful, they must be more than just a box-ticking exercise.

These must be accompanied by a genuine commitment to addressing the aspirations of the Kashmiri people, including their right to self-determination as enshrined in United Nations Security Council resolutions.

A comprehensive approach to resolving the Kashmir issue is needed—one that goes beyond electoral politics and addresses the fundamental grievances of the people.

This includes the demilitarization of the region, the restoration of civil liberties, and meaningful dialogue with all stakeholders, including those who have been marginalized or excluded from the political process.

Ultimately, the future of Jammu and Kashmir cannot be decided through elections alone. It requires a concerted effort to heal the wounds of the past, respect the rights and aspirations of the Kashmiri people, and work towards a peaceful and just resolution of the conflict. Only then can the promise of democracy be truly realized in this troubled region

Courtesy: South Asia Journal